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African renewables are ripe for investment, says Irena

Waste To Energy Biogas plant with solar, battery station and E-car charging station Imago/Joerg Boethling via Reuters Connect
This biogas plant in the Ashanti region in Ghana has solar power, a battery station and an EV charging station, but such projects often face higher financing costs than in developed markets
  • $1.3trn to meet renewable goals
  • 300GW clean energy target by 2030
  • Only 3GW added in 2023

Africa accounted for less than 1 percent of the new renewable energy sources added globally last year, and a conference in Abu Dhabi this week called on wealthy investors to help the continent achieve its targets.

Amani Abu Zeid, commissioner for infrastructure and energy of the African Union Commission, told the International Renewable Energy Agency (Irena) general assembly on Wednesday that the continent plans to grow its renewables capacity to 300 gigawatts (GW) by 2030 from 56GW. By 2040, this number should increase to 700GW. 

Abu Zeid added that renewables account for around 40 percent of Africa’s energy mix, the highest rate in the world. In some countries within the continent, including the Central African Republic, Ethiopia, Namibia and Uganda, this rate reaches over 90 percent. 

However, in the 22 African countries that use renewables as their primary source of electricity generation, more than half the population still lack access to electricity, according to the Mo Ibrahim Foundation.

And more than half a billion Africans lack access to power or clean cooking (ie using cleaner fuels and energy-efficient modern stoves), while demand is set to double.

Finance is the primary challenge. Africa needs about $1.3 trillion to meet its renewable energy goals, but so far only about $30 billion has been made available, the Abu Dhabi conference heard.

“Investments are needed in power generation, infrastructure, and the whole value chain of renewables.”

“We need energy and we need it fast, because of industrialisation, and population growth,” said Abu Zeid. Young people represent 65 percent of Africa’s population.

Last year more than 80 percent of global investments in renewables were made in Europe, China and the US, according to Irena director general Francesco La Camera.

Only 3GW of renewable energy sources were added in Africa in 2023, out of nearly 480GW added worldwide.

Energy investments in Africa often face higher financing costs than in developed markets. Abu Zeid said the African Union and African nations are improving the investment climate to attract private sector and international investments.

Crowd, Person, AdultUNCTAD Photo/Jean Marc Ferré
Amani Abu Zeid, commissioner for infrastructure and energy of the African Union Commission, wants to encourage investment in renewables

“Investing in clean energy is a very profitable business,” she said. “It is not a philanthropy. There are trillions of dollars around the world, but Africa is getting only two to three percent of it, so we want to show business opportunities and improve our credit ratings.”

Countries including Morocco and Egypt already offer incentives for clean technologies such as hydrogen production.

According to FDI intelligence, these opportunities have attracted Gulf countries, which emerged as Africa’s largest investors. More than 90 percent of foreign direct investments from the Gulf came from the UAE and Saudi Arabia, mainly in hydrogen and renewables.

The top five beneficiaries of these FDI inflows were Algeria, Egypt, Morocco, Nigeria and South Africa.

UAE’s Masdar has committed to deploy $2 billion of equity by 2030 in Africa as part of the UAE-led Africa Green Investment Finance Initiative. The aim is to mobilise $10 billion and produce 10GW of clean energy capacity in Africa by 2030.

The company announced partnerships with governments and private entities in six African countries during Cop28.

Last December, Saudi Arabia’s Acwa Power backed Project Dao, a $800 million hybrid solar energy and battery storage scheme in South Africa. It also signed a framework agreement to develop a green hydrogen project in Egypt’s Suez Canal Economic Zone.

In January, Amea Power joined a $150 million project to develop the 125 MW Matambo solar photovoltaic power plant in Mozambique.

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